The year 2012 will be tough

The head of the Turkish Contractors Association (TMB) Emin Sazak put all the figures he had on the table the other day we met. 

The number of projects Turkish contractors have undertaken in 40 years is 6,500 in 93 countries. They have had a total of $205 billion business volume. More than 55 percent of their international contracting projects were located in North Africa, Central Asia and the Middle East. 

Sazak said the construction sector, as it has been in the last 10-year period, was the locomotive of the economy in the first half of 2011. The picture looks very bright until this point. 

But the TMB is pessimistic after this. “It has become extremely difficult to predict the future. We can say that the year 2012 is going to be a tough one,” Sazak said. 

On one side of the coin, there is the Arab Spring factor. Libya is one of the countries where Turkish contractors have lost the most. Their sites were damaged extensively in the uprising against Gadhafi, a portion of the contracts is uncertain and the damage is said to be $5 billion. 

I know very well that the situation is not good for our contractors preparing for major projects in Libya. Because many of the members of the Libya National Transitional Council, while speaking at the panels during the World Economic Forum at Jordan’s Dead Sea in October, said infrastructure contracts between Turkey and Libya were subject to a second review. 

Among those infrastructure contracts, there are airports, shopping centers and mass housing projects. For example, one of the projects to be re-evaluated is the Tripoli Airport Project worth $2.7 billion that TAV has undertaken.

On Libya, Sazak said, “It is unknown when our damages from Libya will be compensated. Obviously, the needs of the transitional government will be prioritized.” 

Like Libya, projects in Tunisia and Egypt have question marks. 

However, there is another factor that threatens international Turkish contracting, a sector that had a business volume of more than $20 billion in the past five years. Western competitors are increasing in traditional markets such as North Africa, Russia, Central Asia and the Middle East.

Spanish, Italian and French contractors in Europe, which is suffering from an economic crisis, are desperately looking for new opportunities in foreign markets. 

Thus, Sazak said, “The increase in the number of Western rivals toughens competition. Our international market share is at risk. Our profitability is falling.” 

Our contractors are in search of solutions or options for the upcoming tough year and thereafter. Sazak advises contractors to go for projects of higher added values in international markets. He stresses that not only engineering skills but also architectural skills should be put forward. When we look at the domestic market, public infrastructure projects seem to be lifesavers. 

My proposal to Sazak is this: We know that our contractors have not passed the test in Turkey during the earthquake, a country where 92 percent of the territory is at risk of earthquakes. If the major part of our building stock is not earthquake resilient, their share of the responsibility is huge. 

Consequently, it is time for the TMB to pioneer this field. We are expecting both safe and beautiful model neighborhoods from the association, especially in Anatolia. 

It fills us with pride that Turkish contractors finish major international projects, but we should first look back home.